The Legislative Budget  Board in cooperation with the Water Development Board (TWDB) and Texas Commission on Environmental Quality (TCEQ), has determined the following:

Subject to a confirmation election, the bill creates the Houston County Groundwater Conservation District (District) providing for the powers, duties, administration, operations and financing of the District. The bill authorizes the District with the powers and duties of Texas Water Code, Chapter 36, related to the general law for Groundwater Conservation Districts (GCDs).

1) Population- The Houston County population projections to be used in the 2007 State Water Plan show very little growth from a 2000 population of 23,185 to 23,947 in 2010.

2) Location & Size- The District’s boundaries would be coextensive with the boundaries of Houston County. Houston County is not located within a Priority Groundwater Management Area designated by the TCEQ.

3) Powers- Same as general law GCDs under Texas Water Code, Chapter 36 with some limitations as noted under item Number 11, Comments on Powers/Duties Different From Similar Types of Districts..

4) District Finances- Same as general law GCDs under Texas Water Code, Chapter 36, including issuance of bonds and notes, levying of maintenance tax, assessing of production fees, export fees, and administrative fees. Unlike general law GCDs, the total indebtedness of the District from the issuance of bonds or notes is limited to $500,000. General law GCDs under Chapter 36 do not have a bond or note indebtedness cap. Similar to general law GCDs, the District would be authorized to assess annual production fees on each well for which a permit is issued by the District based on the size of the column pipe, the amount of water actually withdrawn from wells or the amount authorized to be withdrawn. District production fees may not exceed $0.25 per acre-foot for water used for agricultural purposes and $0.0425 per 1,000 gallons of water for any other purpose. Production fees may be increased at a cumulative rate not to exceed three percent per year. Under general law, annual production fees may not exceed $1 per acre-foot for water used for agricultural purposes or $10 per acre-foot for water used for any other purpose. Similar to general law GCDs, the District may assess an export fee for groundwater produced from a well for transport out of the District in addition to the production fee. Export fees may be assessed annually and used to pay the cost of District operations. Unlike general law GCDs, the District may not assess a fee, except during a drought or other District emergency, on a well drilled by a nonprofit water supply corporation, water district, or other political subdivision if the well’s production is for use within the District.

5) Board of Directors- The District would be governed by a board of nine elected permanent directors serving staggered four-year terms. Unlike general law GCDs, directors would be elected according to the commissioner's precinct method with two directors elected from each county commissioner's precinct and one director elected at-large. Temporary directors are appointed and are responsible for scheduling and conducting the District's confirmation election. Eight temporary directors are appointed by the Commissioners Court of Houston County and one temporary director is appointed by the County Judge of Houston County. The appointments are to include one representative of rural water supply interests and one representative of agricultural interests in the District. The temporary directors become the initial directors if the District is confirmed by the voters. Four initial directors would serve until the first permanent directors election and the other five initial directors would serve until the second permanent directors election. The initial directors in each precinct would draw lots to determine which ones would serve until the first permanent directors election and which ones would serve until the second permanent directors election. In May of the first even-numbered year after the year in which the District is confirmed by election, four permanent directors would be elected. The appropriate number of directors would then be elected in May of each subsequent second year. General law GCDs under Texas Water Code, Chapter 36, have 5 to 11 directors elected by the general precinct method.

6) Eminent Domain- Unlike general law GCDs under Texas Water Code, Chapter 36, the District is not authorized to exercise the power of eminent domain.

7) Ability to Tax- Similar to general law GCDs under Texas Water Code, Chapter 36, including the levy of taxes for the repayment of bonds or notes and the levy of a maintenance tax. Both types of taxes are subject to voter authorization. The District may not levy a tax that exceeds $0.03 per $100 of assessed valuation. Under Texas Water Code, Chapter 36, the maintenance tax for general law GCDs may not exceed $0.50 per $100 assessed valuation and the tax rate for the repayment of bonds or notes is not limited.

8) Overlapping Services- There are no other GCDs in Houston County. The District’s boundaries include the service areas of other water utilities and districts with Certificates of Convenience and Necessity (CCN). The other known overlapping water supply or sewer-service corporations, investor-owned utilities, or local water districts or authorities are City of Crockett, CCN Nos. 10139 and 20058; Consolidated Water Supply Corporation (WSC), CCN No. 10797; Kennard WSC, CCN No. 10927; Pennington WSC, CCN No. 10108; and, Ratcliff WSC, CCN No. 11337.

The primary functions of GCDs are conservation and management of groundwater resources through data collection, rules and well permitting within their boundaries. These functions do not conflict with the services provided by the overlapping water utilities and districts. While general law in Water Code §36.104 authorizes GCDs to purchase and distribute water, HB1241 specifically prohibits this authority for the District.

9) Ability to Exclude Property- As with general law for GCDs, there are no provisions to exclude territory.

10) Adequacy of Boundary Description- The District’s boundaries would be the same as the county boundaries of Houston County and form a closure.

11) Comments on Powers /Duties Different from Similar Types of Districts- District directors are entitled to receive fees of office of not more that $50 a day for each day spent performing duties as a director. The fees of office may not exceed $3,000 per year. These fees of office are less than those authorized under the general law which provide for $150 per day and a limit of $9,000 per year. Similar to general law GCDs, water wells drilled or operated under Railroad Commission of Texas permits are exempted from District regulation except where water production exceeds the Commission’s permit. Unlike general law GCDs, the District may assess production or export fees for water produced from mining activities otherwise exempted from regulation if the water is used for municipal purposes or by a public utility. Unlike general law GCDs, the District may not purchase, sell, transport or distribute surface water or groundwater for any purpose. Differing from the requirements of general law, the District is subject to more stringent requirements for cooperation with other groundwater districts within Groundwater Management Area 11 for the northern part of the Carrizo-Wilcox, Sparta, Queen City, and Yegua-Jackson aquifers. These requirements include coordinating data collection, monitoring, and investigations; sharing data; and notification of detections of pollution. The bill provides that the Act take effect immediately if passed by a two-thirds majority in each house. If passed otherwise, the Act would take effect September 1, 2005. The District would be dissolved on September 1, 2007, if it is not confirmed by the voters by this date, and Special District Local Law Code, Chapter 8805 would likewise expire on September 1, 2010.

12) TCEQ’s Supervision- Same as for general law GCDs, including bond review authority. The TCEQ’s supervision authority as it is related to the District’s development and implementation of a management plan would be the same as for general law GCDs. As with general law GCDs, the District would not have to comply with TCEQ financial auditing requirements.

13) State Water Plan Objectives-Water Use:  Within Houston County, 43 percent of the total water use was groundwater in the year 2000.  Fifty-nine percent of the groundwater use was for municipal purposes,   The proposed district would be located over the Carrizo-Wilcox Aquifer.  The county's total water use to be included in the 2007 State Water Plan is projected to grow very little, from a year 2000 total of 3,016 acre feet of use to 3,050 acre feet of use in 2050.

TWDB staff finds that the creation of the proposed district is not in conflict with the State Water Plan objectives of promoting the efficient use of local groundwater resources and the implementation of practices and programs to effectively manage local groundwater resources.